Coinbase customers withdraw $248 million worth of stablecoins amid liquidity fears

Coinbase Global Inc COIN customers recently withdrew a significant portion of their holdings after rumors of a potential "liquidity crunch" began circulating on social media.

What happened: CryptoQuant on-chain data, first reported by CryptoSlate, revealed that $248 million in stablecoins left Coinbase on July 15. Essentially, the exchange lost 50% of its stablecoin reserves on Coinbase. Pro in a single day.

Comparatively, exchanges like Binance only saw 1% of stablecoin reserves withdrawn on the same day.

After peaking at $1.2 billion in January, stablecoin reserves on Coinbase have now fallen to just $284 million. Meanwhile, Binance's stablecoin reserves exceed $16 billion and remain on a steady upward trend since 2019.

Coinbase traders have started withdrawing their stablecoins after a report from Business Insider that the exchange would shut down its affiliate marketing program.

"It was not an easy decision, nor taken lightly, but, due to crypto market conditions and the outlook for the remainder of 2022, Coinbase will not is unable to continue supporting incentivized traffic to its platform,” an email from Coinbase to Insider reportedly stated.

The move comes after Coinbase announced it was "phasing out" the Coinbase Pro exchange and decided to merge its USD and USDC order books to enable "more liquidity deep".

Some market participants believed the moves were indicative of a potential liquidity crisis on the exchange, while others pointed out that Coinbase still has $6 billion in liquidity in its balance sheet, as well as a significant amount of cryptocurrency reserves. Last week, CEO Brian Armstrong took to Twitter to explain four factors that would help Coinbase "win" in this environment.

Yet amid growing liquidity concerns, some customers have reported being unable to withdraw funds from the exchange.

Price Action: According to data from Benzinga Pro, COIN shares traded up 0.60% after hours on Friday.

Bitcoin BTC/USD was trading at $21,045 at press time, up more than 1% over 24 hours.

Ethereum ETH/USD and Dogecoin DOGE/USD were at $1,360 and $0.064, gaining 1.75% and 0.34% respectively over the same period.

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